Pelago, a telehealth clinic service focused on addressing substance use management, announced a $58 million Series C financing round Thursday morning — bringing its total funding to $151 million.
The additional capital will be utilized to boost the company’s substance use disorder treatment offerings and buoy its clinical research efforts.
The already sizable substance use and treatment market is expected to have a compound annual growth rate (CAGR) of 9.05% through the end of the decade, making the multibillion industry ripe for competition and disruption.
While many may see inpatient rehab as the standard of care, there are opportunities that are more accessible and less costly for patients through virtual care, according to Pelago CEO and co-founder Yusuf Sherwani, MD.
He told MM+M that by taking a proactive, personalized approach to treatment through virtual health, more patients can receive necessary, effective care at a fraction of the cost of rehab and without the additional stigma related to addiction.
This can also broaden access, he said, because it will allow more people dealing with substance use that haven’t already sought care to find a delivery model that works for them.
He added that by working with employers and health plans, Pelago has its eye on lowering the downstream costs of acute problems that arise from substance use by embracing the tenets of preventive medicine.
Sherwani estimated that Pelago’s model can save 60% of the average costs related to treating a person with substance use disorder, though he noted that the category is in its early days of disruption.
And like other players in the space, the company views substance use disorder as a chronic disease rather than something of a moral failing.
“The great news about substance use disorder is that since it’s a chronic condition, it means you can treat and manage it. But it takes recognition of that fact, in order to do so,” he said. “What we’ve seen people start to notice over the past few years is that it turns out that when you give proactive treatment to people and you don’t just wait for them to crash, end up in the ER and go to rehab, there’s a real ROI and doing that can avoid a lot of those costs.”
Thus far, Pelago has been successful in attracting several notable clients, including MetLife, Phillips, GE Appliances, American Eagle Outfitters, Dollar Tree and AT&T, among others.
Of note, Pelago’s financing effort was announced a few months after it selected SolComms as its agency of record for PR, comms and thought leadership for 2024.
Sherwani added that this financing effort will boost its clinical research capabilities led by Dr. Suzette Glasner, a substance abuse expert and a principal investigator at UCLA Integrated Substance Abuse Programs.
He said the primary focus of Glasner and her team is on using technology to achieve long-term habit changes among patients, drive savings for employers and establish the validity of the company’s program.
From a marketing perspective, he said Pelago is data-led and centered on B2B opportunities rather than leaning into provocative, emotional ads seen in the consumer space.
The go-forward for the company involves doubling down on growth, he added, as well as new product development into other therapeutic areas.
